Back to Work

Workers who are involuntarily displaced from their jobs can face long periods of unemployment. Wages also tend to be lower once they find a new job, especially when they are unable to find a new job in the same occupation as their pre-displacement job or in occupations using similar skills. Helping displaced workers back into work quickly and minimising the income losses they face is therefore an important challenge for employment policy. This series of reports provides new empirical evidence from a comparative perspective on the incidence of displacement and the risk displaced workers subsequently face of a long spell of unemployment and large wage losses when re-employed. It also identifies the main labour market programmes providing help to these workers and assesses how adequate and effective they are. Policy recommendations for further action are presented.

Nine countries are participating in the review: Australia, Canada, Denmark, Finland, Japan, Korea, New Zealand, Sweden and the United States.

In Korea's dynamic labour market, job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over the course of their working lives. Some workers are more vulnerable than others to this risk and may face long periods of unemployment/inactivity after displacement, particularly if their skills are not well-matched to emerging job opportunities. Even when they find new jobs, displaced workers tend to be paid less, have fewer benefits and are more likely to be overskilled than in the jobs they held prior to displacement. Helping displaced workers get back into good jobs quickly should be a key goal of labour market policy. To achieve this goal, Korea needs to increase resources devoted to re-employment programmes, such as job-search training and job matching, to improve their performance and better target those who need the most help. Existing training programmes need to be revised to ensure that people are obtaining skills that will help them find work. The social safety net also needs to be strengthened to lower the personal and societal costs of displacement, notably by improving the coverage of unemployment benefits.

The OECD Employment, Labour and Social Affairs Committee (ELSAC) has decided to carry out a thematic review of policies to help workers who lose their jobs for economic reasons or as a result of structural change to move back into work. This review builds on other recent research conducted by ELSAC on topics such as youth unemployment, activation policy, skills and the labour market impact of the Great Recession.

The incidence of job displacement, or involuntary job loss due to economic reasons such as firm closure or downsizing, has not risen in Korea over the past decade. However, displacement risk, and the difficulty of finding a new job, increases in economic downturns. Older workers, the least qualified and those in small firms are particularly vulnerable to displacement, and to being out of work for a long time afterwards.

This chapter examines the prevalence and consequences of job displacement in Korea. The risk of job displacement in Korea has not increased over the past decade, but is higher when economic conditions are poor. Some groups of workers are more vulnerable to displacement than others, and spend longer out of work if they are displaced. On average, displaced workers who find new jobs tend to be paid less, have poorer working conditions and are more likely to be over-skilled than in their pre-displacement jobs, partly because they may lack the types of skills that are in demand in growing industries.

This chapter examines the availability and adequacy of income support for displaced workers. The main form of income support for displaced workers, unemployment benefits, has considerable gaps in its coverage. Many of the workers who are most vulnerable to displacement are also least likely to have adequate income support to help them bridge the gap between jobs. Displaced workers without adequate income support risk falling into poverty and may be forced to take jobs for which they are poorly matched. It is vital that existing gaps in the social safety net are rectified to limit the cost of displacement for workers and their families.

This chapter examines active labour market policies and programmes designed to help displaced workers find new jobs. Displaced workers can access job search assistance and training from an array of organisations, including central and local government job centres, non-governmental organisations, and private employment agencies and training providers. Overall, too much emphasis is currently given to vocational training at the expense of job-search assistance and training, which has been shown to be the most effective form of intervention, particularly for people with a relatively short duration of unemployment. All programmes need to be thoroughly evaluated to ensure that resources are allocated as efficiently as possible, particularly now that private employment agencies and local government are playing a greater role in service provision.